**7. Conclusion**

The implementation of microgrids reduces the energy cost and increases reliability. Microgrids are excellent in extracting energy from renewable energy. Microgrid is a controlled system which offers both power and heat. The heat

collected by solar thermal collectors is used to heat the air as well as water, which reduces the burden of microgrid energy supply which is becoming popular in residential and commercial loads. Distributed power source is becoming more attractive because the green energy, pollution free, modular, and availability are in plenty, and it can supply power to the existing transmission and distribution systems without any alterations. Microgrids are excellent system for extracting power from distributed generation. In otherwise, microgrids are operating as a locally controllable cell of power system network. Microgrid operations are done by grid connected and islanded mode. In grid connected mode each individual, the microsources able to act as current source with maximum power transfer capability to the grid. Any fault or emergency situation microgrid will operate under islanded mode automatically which ensures the reliability of the power supply. The implemented simulation model for the hydro microgrid is explained in a MATLAB/SIMULINK environment. Although the hybrid grid model replaces the AC and DC grid, there is a technical challenge for the implementation of the hybrid grid model based on the AC dominated utility electrical setup. The peer-to-peer and plug-and-play model are used in the microgrids, which ensures that any component loss will also make the microgrid operational and it can continue the power supply. The data communications and control mechanism implementations make the hybrid microgrid as smart grid. The microgrid is acting as application of smart grid which is the future grid of the world.
